Serial Bootstrapper: Oversee and Manage Founder Fred Hsu (Part 5)

Sramana Mitra: In 2009, you were out. What did you do next?

Fred Hsu: I moved out of LA. I married and had two kids. I raised them for a couple of years and got the entrepreneur itch again. Then in about 2010, I met up with an old college friend called Kai. He was in the Computer Science program in UCLA with me. He and I had actually met the day our parents dropped us off at the dorm. We were about 17 back then in 1996 and had been very close throughout the years. We decided we wanted to do some more projects together.

In 2010, we created a company called AppBank. The concept there was to capitalize on the social wave. We allowed end users to create their own apps on Facebook. It went from zero to single-digit millions in revenue pretty quickly. It was very profitable.

Sramana Mitra: Was it a platform company?

Fred Hsu: Correct. We made money and did well from 2009 to 2010. Eventually, Facebook cut off the free marketing channels to substitute with their own advertising demand. That business collapsed and it no longer exists.

Sramana Mitra: Zynga’s business collapsed on Facebook.

Fred Hsu: Yes, pretty similar. That taught us a great lesson to never have as much platform dependence. It’s better to build something that can be well diversified and not necessarily rely on any single provider for anything.

Sramana Mitra: What did you do after that?

Fred Hsu: In 2011, Kai and I got together again and decided to build a mobile platform. It was originally meant to do social page management similar to Hootsuite. A couple of other co-founders joined us as well. At first, it was social but we were a bit late to that by a year or two. But what we heard in the marketplace was that if we can help gaming companies acquire users at scale and build a platform for it, we would have instant customers.

We spent about six months developing a programmatic buying platform for customers all within the mobile platform and tablet context. Gaming companies like Zynga would come to us and ask us to generate high-quality customers through app install campaigns. In exchange, they would pay us per user.

Sramana Mitra: If you look at the business model, what kind of numbers are we talking? How do you calculate?

Fred Hsu: Primarily, the success metric in these types of campaigns is either a customer who has installed your app or a customer who has both installed your app and performed an initial transaction. Usually, we’re talking about single-digit dollar ranges – $5 or $6 all the way to $40.

Sramana Mitra: Are we talking games mostly?

Fred Hsu: Mostly games. Increasingly, more brands came in as they became more aware of the mobile end user.

Sramana Mitra: It’s mobile commerce.

Fred Hsu: Yes. Some of our clients are Zynga, Machine Zone, Uber, Lyft, and Hotels.com. We run the gamut of commerce, travel, and gaming. One thing that’s common between all these companies is the fact that they have a mobile app and they’re actively investing behind their mobile presence.

Sramana Mitra: I imagine that you bootstrapped this company and now you have plenty of your own money to bootstrap it with.

Fred Hsu: Correct.

This segment is part 5 in the series : Serial Bootstrapper: Oversee and Manage Founder Fred Hsu
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